No Good Projects without Poor Economics

No ‘good’ projects were convincing enough to scale up. Well, at least, among projects addressing poverty that I was involved in. I have been working for international development for a decade at an NGO, a multilateral institute and a bilateral agency. My experience tells that projects are often labelled ‘good’ without evidence. In the discussion either with policy makers or development practitioners which projects to scale up, ‘good’ projects were chosen with political, institutional, subjective and unconvincing reasons. Until I got to know randomised controlled trials (RCTs) applied in development fields, I was not confident at all to say which policy options we should take.

Last week, I incidentally discovered Poor Economics in my classic literature library. Banerjee and Duflo put this masterpiece out into the world surprisingly just 4 years ago. I am sure their book is now stored in many book rooms as one of the classics in development studies though it is new. I started reading the book that I only read the summary and watched their presentations before.

Poor Economics has a magical power to bridge two different worlds: research and implementation. With the rigorous application of scientific methodologies, it suggests that development organisations experiment several combinations of project designs or policy options to achieve goals.

Poor Economics will not tell you whether aid is good or bad, but it will say whether particular instances of aid did some good or not. We have advantages over the previous generations: high-quality data from a number of poor countries and RCTs, which give researchers a chance to implement large-scale experiments designed to test their theories.

From policy perspectives at the country level, it does not really matter country comparisons. It is rather crucial to see if particular approaches work in the country context. Although some development agencies have global practices operated in several countries and regions, aiming to achieve one particular goal, they need to think about order-made designs when it comes to implementation. One policy option might work in a place, while the other might not in other places. We will never know what works or not until we test those options.

Walking into the library gave me a chance to look back some of my projects in charge. Creating evidence is our responsibility as development practitioners. Choosing right policy options with evidence is responsibility of policy makers of developing countries.

Lastly, there is a paragraph that I like in Poor Economics. It summarises disagreement in poverty and development between Jeffrey Sachs, William Easterly and Dambisa Moyo. The answer of Poor Economics would be ‘We are not sure what is good or bad without evidence.’

Sachs believes that the poor are poor because they are poor – in what economists call a “poverty trap.” Until something is done about their problems, neither free markets nor democracy will do very much for them. William Easterly and Dambisa Moyo argue that aid does more bad than good: It prevents people from searching for their own solutions, while corrupting and undermining local institutions and creating a self-perpetuating lobby of aid agencies. The best bet for poor countries is to rely on one simple idea: when markets are free and the incentives are right, people can find ways to solve their problems.